No renaissance for U.S. factory workers as wages stagnate

Machinist Michael Pargeter reached for a reference to a TV cartoon to explain why union members this month were spurning a contract offer from Boeing Co.

Wages would be set "back to the Flintstones era" with a plan to slow future raises for new employees, Pargeter, 62, said outside a Seattle union hall last week while ballots were being counted.

Boeing's quest for concessions and employees' opposition exposed a fault line in U.S. industry's post-recession comeback: Even with hiring and output robust enough to be dubbed a manufacturing renaissance by President Barack Obama, workers are falling behind. Factory pay hasn't kept pace with inflation and has fallen 3 percent on that basis since May 2009, while average pay for all wage earners slid only about 1 percent.

"We need to focus on how many jobs there are that give an adult a chance to earn a decent living," said Gordon Lafer, an associate professor at the University of Oregon's Labor Education and Research Center in Eugene. "Too much of the discussion has been about the number of jobs, and that's obviously important, but there's also a crisis in the quality of jobs."

Boeing said it needed labor givebacks to keep the Seattle area as the home of the 777X jet, a new model with more than $95 billion in orders since September. Union workers said Boeing needed to share more of the wealth they help create.

"This is really a symbol of what's going on in this whole country," said Machinist Thomas Campbell, 40. "We're losing middle-class jobs."

Where unions and their allies see reason for alarm, employers see a way to retain jobs against the lure of lower wages overseas. There were about 12 million U.S. factory jobs in October, buoyed by recent gains while still down 39 percent from 1979's peak.

"We certainly have seen manufacturers become much more competitive," said Chad Moutray, chief economist at the Washington-based National Association of Manufacturers. Falling labor costs have helped "keep U.S. manufacturers much more competitive and you're seeing more investment in the U.S. as a result."

The number of U.S. factory jobs is headed for its fourth annual gain. That's the longest since a five-year streak ended in 1997 and ushered in a dozen years of declines.

"What's being referred to as a recovery in manufacturing is to a large extent a recovery in profitability," said Dean Baker, co-director of the Center for Economic and Policy Research, a Washington-based group funded by unions and private foundations. "That's good for the companies and good for the shareholders but it's not necessarily good for the workers."

Boeing, the largest U.S. exporter and this year's top performer in the Dow Jones Industrial Average, offered raises in the contract offer to Machinists. In return, the Chicago-based planemaker wanted to end the current pension and impose a wage scale that would mean a 16-year wait for newly hired employees to reach the top pay tier, instead of six now.

"When times are good, it's easy to forget that continued success is not guaranteed," Boeing Commercial Airplanes President Ray Conner said in a Nov. 8 letter to employees. He said that Boeing would weigh "all options" for a site to build the 777X after the union's 2-1 rejection of the contract.